The Economist on Digg & “Social News”

The Economist (subscription required) had some choice words in describing Digg and “social news.” After your typical one paragraph introduction to the concept, we get the following:

“Digg has become an internet phenomenon. It has over half a million registered users and has been valued at over $200m despite having just $3m in revenues and no profits. Its success has spawned similar sites such as Reddit and Newsvine, and prompted the world’s largest media company, Time Warner, to turn its ailing Netscape.com news portal into a social-news service instead.”

Looks like another major publication giving us valuation numbers but unwilling to explain the logic (or source) behind them. The last rumors I had heard (too many to keep track of) had Digg shopping around with a $150m price tag including claims that it was profitable. But I suppose you never know the real details with private companies. The Economist goes on and calls the valuation buzz “ridiculous.”

“Though their news values might horrify a conventional editor, social-news sites have been feted as the future of media—Digg has even been called the “New New York Times”. Of course, much of this hoopla is ridiculous. Digg creates no original content, instead relying heavily on the traditional media to provide its stories. And the website for the New York Times attracts 13 times as much traffic as Digg, according to recent figures from Hitwise, an internet-research firm.”

And then we get the classic most-active-users-do-everything rhetoric:

“Furthermore, Digg and Netscape have heavy users who behave, in effect, rather like editors: most of the stories that end up on Digg’s front page are submitted by a very small band of hardcore users. Since its launch in 2004, the 100 most active users submitted more than half of the stories that reached Digg’s homepage.”

So after giving us a few reality checks, the Economist tries to end on a positive note:

“Even so, Digg does have some lessons for old-fashioned news publishers. Providing links to Digg or other social-news sites can be a good way to bring in readers. Many websites now put a “Digg it” button below their stories, to make it easier for readers to submit items to Digg. Moreover, Digg has a massive readership among under-30s, an audience which traditional news outlets are trying and largely failing to attract, online and off. Evidently its readers are interested in a certain amount of serious news, provided there are also offbeat and light-hearted stories…”

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